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Forecasting the Turbulent Tides


Getting fully into the swim of the nautical theme we cast for our annual countdown of the nation’s top-ranked food retailers, which begins on page 27, Burt P. Flickinger III, managing director of New York-based Strategic Resource Group, is awash with insights as to what’s churning the turbulent waters of a food industry in flux.

“During the past fiscal year, The Super 50 has navigated through some of the stormiest seas in modern supermarket history,” says Flickinger, pointing to “a tsunami of supermarket bankruptcies” compounded by “a Bermuda Triangle of financial fallout” and a full-blown “nor’easter at one of the fastest-growing chains along the New England coast shutting down in the peak summer season (Demoulas/Market Basket).”

Asked to further decode the unique patterns of the denizens of our five Super 50 “oceans,” Flickinger is buoyant about the operators we’ve designated as being “At the Helm,” which he affirms “are winning the major battles in the wars not only on the sea (stores), but also in the air (e-tail).” Singling out Kroger as “the best managed multichannel retailer worldwide, with an exceptional leadership team” 25 years in the making, Flickinger also tips his cap to Albertsons-Safeway, “for stabilizing the big-chain supermarket sector while brilliantly resurrecting the bankrupt A&P” and its metro New York banner affiliates, as well as the spectacularly flamed-out Haggen in the Pacific Northwest.

He also gives props to Wakefern/ShopRite for strides similar to those being made by the band of “Rising Tides” — Meijer, Giant Eagle, Hy-Vee, WinCo, Smart and Final, K-VA-T — whose “superb strategies and extraordinary innovation have raised the standards across the board for their shoppers.”

Gazing at the swell of leaders charging “Beyond the Mainstream” with an expanded depth and range of extra-fancy produce, free-from foods and organics, Flickinger extols “Kroger and WinCo for leading the way by cutting into some of Whole Foods’ previously most profitable and productive suburban markets in the West and Intermountain regions.” Also noteworthy are Sprouts’ and Trader Joe’s “expansion in spirit-based beverages and fresh perimeter offerings, as well as Aldi’s and Walmart’s [dramatically lower prices] on key value fresh and shelf-stable naturals and organics.”

New leadership and revamped in-store strategies are the common bonds of those Changing Course, including Target and Southeastern Grocers, which are altering tacks to execute new maneuvers. Flickinger believes “Target’s business will be buffeted on the stormy seas” until it secures a meaningful lifeline to its weekend out-of-stocks (OOS), while giving a passing grade to the early outlook for Southeastern Grocers’ new Winn-Dixie Florida East Coast format and fresh meat focus. However, he adds, the Jacksonville, Fla.-based chain appears to need reinforcement with in-store staffing, along with addressing some OOS issues as well.

Meanwhile, stalwart among the members of the “Steady as They Go” brigade is the ship that Jack Brown built — Stater Bros. — “whose stakeholders were rewarded as it weathered the SoCal recession better than many of the larger chains,” Flickinger observes.

He further foresees productive days ahead for Big Y, Demoulas/Market Basket, K-VA-T, Smart & Final, and Weis Markets, all of whose hatches are comparatively battened down versus “many competitors in transition.”

Of particular note is “Steve Smith’s dynamic leadership, [as evidenced] by adding 29 stores acquired at a good value from Southeastern Grocers, as well as overall innovation, which should lead K-VA-T to record results.” As for K-VA-T’s share group partner Coborn’s — a part of whose native waters has been hit by the downturn of the Bakken Region oil boom — the multiformat St. Cloud, Minn.-based retailer has commendably added “a number of good people of late to withstand the wild weather blowing in from North Dakota.”

Gazing at the much calmer waters now in play at Market Basket and Brookshire’s, as well as at a handful of other private, ESOP and publicly owned vessels holding their own on the choppy supermarket seas, Flickinger predicts “a good year ahead for the best-led food retailers to capitalize on the opportunities to take more unit sales away from the restaurant and on-premise dining sectors.”

But make no mistake: Even the best of skippers must keep their ships enduringly equipped, in expectation of rough sailing, with deliberate planning, front-line reinforcement and grounded execution.

Meg Major
[email protected]
Twitter @Meg_Major/@pgrocer

During the past fiscal year, The Super 50 has navigated through some of the stormiest seas in modern supermarket history.

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